After revelations from the Royal Commission led to eroded trust in major banks, will customers warm to new entrants backed by regulations designed to promote competition?
A pathway set up by regulators to incentivise new entrants in the banking sector is starting to gather momentum, with Volt Bank receiving an $8.5 million investment from listed company Collection House (ASX: CLH).
The Australian Prudential Regulation Authority (APRA) yesterday granted Volt a licence to operate as an authorised deposit-taking institution (ADI) without restrictions, as part of a framework set up in May 2018 to assist small firms with limited financial resources.
At the time, APRA chairman Wayne Byrnes said making it easier for aspiring ADIs to enter the market would help enhance competition and potentially innovate new business models, while the scheme would also maintain safety and stability in the financial system.
Volt has so far raised more than $45 million in Tier 1 capital from four funding rounds, and is the first completely new start-up entity to be licensed as a retail bank in Australia since 1981.
The bank playfully lists its founders as Steve Weston, Luke Bunbury and a dog called Lucy.
Volt has had a strategic alliance with Collection House since November 2018, with plans to roll out new products and services to the companies' respective customers this year. CLH's investment gives it a 4.5 per cent stake in the group.
"This investment is part of Collection House's ongoing digital transformation strategy, and we're delighted to be working closely with Volt Bank to deliver some real benefits to our customers," says Collection House chairman Leigh Berkley.
CLH's CEO Anthony Rivas highlights the agreement allows the company to expand its collection services and analytical services divisions to offer new and innovative financial products.
"There is a strong alignment between our companies, as we are both committed to utilising technology to deliver better, safer and fairer ways for people to look after their money," says Rivas.
Volt's chief executive and co-founder Steve Weston says the group is thrilled to strengthen its existing alliance with Collection House through investment in the company.
"We share a vision to make Australians' financial journeys simpler and better by putting customers at the centre of everything we do," says Weston.
"We also see significant potential to collaborate on new technologies, particularly the digitisation of hardship identification, assessment and treatment programs."Never miss a news update, subscribe here. Follow us on Facebook, LinkedIn, Instagram and Twitter.
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